Question 21

Reference: 10-04

Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:

Standard QuantityStandard Cost per Bag

Direct Materials 20 kilograms $8.00

Direct Labour 0.1 hours 1.10

Variable Manufacturing 0.1 hours .40

Overhead

The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows:

Production of Fastgro: 4,000 bags

Direct Materials Purchased 85,000 kilograms at a cost of $32,300

Direct Labour Used 390 hours at a cost of $4,875

Variable Manufacturing Overhead $1,475

Incurred

Inventory of Direct Materials on 3,000 kilograms

January 31

What was the labour efficiency variance for January? Do not round intermediate calculations.

Question 21 options:

A)

$110 favourable.

B)

$475 favourable.

C)

$130 unfavourable.

D)

$350 unfavourable.